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Why negotiation skills are crucial in the transport industry

When the world was young, most people (except for mythological explorers or itinerant tribes) tended to stay relatively close to home. Then we started complicating things by inventing ways of moving that were quicker than our feet or our horses and so we developed the need to go further, faster and more often.

Anyone in the UK who is about to sit in the traditional August Bank holiday traffic jam staring at roadworks, or hapless commuters on Southern Railways, will know this only too well. We often speak of an ever more connected world, of global networks and advanced transport technology, but the truth is that, as a personal experience, very few journeys ever happen as quickly and uneventfully as we would wish.

Leaving aside the weather, this is principally because humans are involved. Too many drivers want to use the same trunk road at one time. Failure to maintain a stretch of track causes a series of train cancellations and massive overcrowding. Air-traffic controllers go on strike and planes aren’t flying. A terrorist threat puts major ports on high alert and checks are taking three times as long. I forget my passport.

The infrastructure and processes that govern the success or failure of transport (on the personal or on the global scale) are all dependent on human interactions, and most of those interactions are – in some form or another – negotiations. Some are small: I’ll change places with you so that you can sit next to your wife on the flight if you both move so that I can have your aisle seat. Some are big: we’ll let you plough up miles of countryside to put your new high-speed railway through it, provided we have the right legally binding compensation and renewal plan agreed at government level.

When you or I buy a car, or when a carrier places an order for a new fleet of long haul airliners, much of it is about the sale, (will it do what I need it to do? Do I trust the supplier?); but much of it is also about the negotiation. And there are dozens, perhaps hundreds, of issues to be resolved before an agreement is reached. Let’s look at the aircraft purchase example. Price is the most obvious and ever-present issue, but often the unskilled negotiator stops there. Many of the other really big issues such as IP ownership for jointly developed technology, or flexibility of order fulfilment contingent on macro-economic factors, are in the airline’s mind, but are they really used against each other in the negotiating process itself?

A series of very wise observations by Aengus Kelly, CEO of aircraft leasing specialists Aercap in “Airlines International” includes this crucial observation: “The crux of the dilemma is lack of negotiating experience. Most airlines will sit down to negotiate a transaction with an OEM every five or six years. The person on the other side of the table is doing it every day.” In that scenario, who is likely to be the more skilled?

And at a more every day commercial or operational level, think of the train company negotiating with its staff over manning levels, or the Highways Agency or utility companies negotiating with local authorities over when, where and for how long they need to re-direct traffic around a hole in the ground. On the major corporate stage, it’s much more complex.

It’s the sheer range of issues that baffles many people involved in the negotiations and chiefly because negotiations isn’t their main skill or professional mission. They’re operations managers, network engineers, finance directors, systems analysts. Even salespeople don’t necessarily have the skills. They think that if they (airline, logistics operator, travel agent, taxi service, bike courier) have built a desire and established competitive advantage for a customer to put all its employee and cargo transport arrangements in their hands then the job is done. There are dozens of contingent issues (price, penalty charges for damage, cancellation terms, consequential loss of delays, non-standard cargo, volume discounts, length of contract, exclusivity of supply)  that might get in the way of the salesperson signing the contract, booking the revenue and moving on to the next sale. So they are swept away in the rush – and sometimes at considerable long-term cost.

Proper preparation and planning for negotiations has at least two major upsides. First, it makes the process much less scary. Secondly, it ensures the outcome is more likely to stick.

Our research into the verbal behaviours of skilled versus average negotiators showed that the skilled group are more than twice as likely to make frequent mention of long-term issues in their own negotiation planning sessions as the unskilled group are. And they make nearly four times as many mentions of anticipated common ground. And that’s just their internal discussion, before they even get face-to-face with the other party. Once they sit down with the people to whom they are selling or from whom they are buying, there’s a container ship full of skill differences between the successful and unsuccessful practitioners.

One of many is the avoidance of straight counter proposals, a common trap for the unskilled, inexperienced or infrequent negotiator. Our observational research showed that, per hour of speaking time, less skilled negotiators make nearly twice as many counter proposals as skilled. Yet in 2014, when we surveyed 1300 negotiators in 53 countries we discovered that half of them still use them. Why is this a problem? Because responding with an immediate alternative to the one proposed, rather than jointly exploring their proposal and trying to understand the reasons behind it, is tantamount to saying: “I’m not listening to you, I have certain targets and I’m sticking to them”. And if you’re not listening, you’re not really negotiating.

That’s just one example among hundreds of the traps that lie in wait for the unwary – and untrained – negotiator. Once organisations involved in the transport business – buyers and sellers alike – start thinking about negotiations as a learnable skill rather than random activity, we might all start going places.

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Download our benchmark study of some of the world’s largest organisations. Discover their top ten factors for negotiation success. This report is important reading for anyone evaluating their company's negotiation capability and / or considering a skills improvement programme.

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Further reading

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By Tony Hughes | November 1, 2017